Orient Magazine Issue 81 - April 2021 - Page 65

A growing momentum for the CCUS industry
There is room for optimism on the progress of CCUS as it is now a key part of energy policies in major developed markets , such as EU , UK , Norway , US and China . Recent moves on carbon taxation and / or carbon trading schemes , including most recently a country-wide emissions trading scheme announced in China , are also supportive of the long-term future for CCUS . While there are CCUS projects in operation in various industries , and a number of larger scale projects announced recently are still in design or pilot stage , CCUS is now moving to the front and centre of the minds of the world ’ s largest energy companies with tax incentives , grants and other forms of incentive mechanism now emerging to support development of the industry .
There is a positive momentum within the investment community towards CCUS , for example , a recent investment in Storegga Geotechnologies by Singapore ’ s sovereign wealth fund , GIC , and Japanese trading house , Mitsui &
Co . Ltd .
There is certainly a recognition that there are some aspects of CCUS , principally relating to risk allocation , project economics and fiscal stability , which need to develop before the finance sector is able to commit significant capital , and are obviously quite difficult for equity to take as well . However , if the current trajectory is maintained , then the first commercially financed projects would be seen taking off both in the US and countries bordering the North Sea ( UK , Norway etc ).
Government and policy support is critical
The first step for the CCUS industry to move ahead inevitably has to come from the government – not in terms of financing of projects , but rather recognising the need for CCUS , including this in policies and providing the regulatory / incentive mechanism within which to implement projects . A compelling vision and strong regulatory framework are needed to give a clear view of why carbon capture is a necessity and how the industry will develop . This will make it easier for sponsors to develop solutions in complimentary parts of the CCUS value chain . The government has a key role in stimulating the CCUS sector and making it viable as it has the ability to garner public support thanks to the tangible emissions reductions it will deliver .
It is equally important to ensure that carbon taxation does not lead to carbon leakage , with emitters moving from high to lower taxation jurisdictions .